Definition

The Federal Trade Commission Act of 1914 created the Federal Trade Commission, a government agency authorized to both protect consumers and maintain a competitive marketplace.

Today, the mission of the Federal Trade Commission includes the prevention of anticompetitive and deceptive business practices, as well as the enhancement of consumer information and choice.

Explanation

The Sherman Antitrust Act of 1890, along with the Clayton Act of 1914 and the Federal Trade Commission Act of 1914, were groundbreaking statutes geared towards limiting monopolies and cartels. In the years following the Sherman Act, courts applied the law to trade unions, which found it impossible to organize so they could bargain with their employers. There were also a number of mergers, which reestablished the market power of the cartels outlawed by the Sherman Act.

The Clayton Antitrust Act of 1914 would specifically outlaw price discrimination, tying arrangements, and provide federal oversight into mergers and acquisitions. The Federal Trade Commission Act of 1914 would create the Federal Trade Commission (FTC), one of the two agencies with jurisdiction and authority to regulate mergers and acquisitions.

The Act would create a five-member bipartisan board consisting of individuals appointed by the President for terms of seven years. The commission was authorized to issue "cease and desist" orders aimed at curbing anticompetitive business practices. Essentially, the FTC was originally created to enforce the provisions of the Clayton Antitrust Act.

Today, the goals of the FTC remain very much aligned with those originally envisioned, including:

Protecting Consumers: includes the prevention of fraud as well as the elimination of unfair and deceptive business practices.

Maintaining Competition: includes the prevention of anticompetitive mergers and other anticompetitive business practices.